On May 5, 2021, the Centers for Medicare and Medicaid Services (CMS) published new regulations that: (1) fix a major concern arising from the ARPA COBRA subsidies, and (2) announce the 2022 maximum out-of-pocket limits for non-grandfathered health plans.
The COBRA Subsidy Fix
We’ve spent a lot of time over the past few months on the implementation of the COBRA subsidy created by the American Rescue Plan Act of 2021 (ARPA). The subsidy expires on September 30, 2021 and even as we are working to implement it, we are also facing the question of what happens when it ends. One large concern has been that voluntarily terminating COBRA coverage does not typically create a special enrollment right that allows qualified beneficiaries to enroll in individual market health coverage. This would have meant that when the subsidy stops, there would be no way for individuals now facing the full cost of COBRA to change to an individual market plan.
The new rule “fixes” this problem by creating a new individual market special enrollment right upon the
cessation of employer contributions or government subsidies towards the cost of COBRA. Not only does this mean that individuals losing the COBRA subsidy on September 30, 2021 will have a chance to enter the individual market, it also creates that right where an employer offsets COBRA costs (such as in the case of severance) that expires before COBRA does. For these purposes the applicable subsidy or employer contribution does not have to be 100%, even a partial subsidy will trigger a special enrollment right. That sixty-day special enrollment period begins as the last day that an employer or government entity subsidizes COBRA coverage. Note that this special enrollment right DOES NOT apply to employer-sponsored plans.
Maximum Out-Of-Pocket Limits
The CMS guidance also included the new out-of-pocket maximum limits (listed below) that will apply to
employer-sponsored health plans in 2022. To comply with the ACA, non-grandfathered health plans cannot have higher out-of-pocket maximums for essential health benefits.
